‫בס"ד‬
Health Reform in Israel A Model to be Followed by
Switzerland?
Shuli Brammli-Greenberg, PhD
Myers-JDC Brookdale Institute and Haifa University
Israel
MSD-EXPERTEN-APERO
25 OKTOBER 2012
Acknowledgment
I wish to thank Ruth Waitzberg , Dr. Ephraim
Shapiro and Dr. Bruce Rosen from JDC-Myers
Brookdale Institute for their valuable input
Reference
All data are 2010 data unless otherwise
indicated; all Swiss data are OECD health data
/ Commonwealth data and all Israeli data are
Israeli CBS/MOH / OECD data or findings
from the ongoing NHI evaluation research at
Brookdale institute
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Outline
• Introduction
• Highlights of key differences between Israeli and Swiss
Systems
• Discussion of lessons to be learned
• The following aspects of the Israeli health care system
will be covered:
–
–
–
–
–
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The National Health Insurance
Financing and expenditures
Organizational structure and care delivery
The pharmaceutical market
Inequalities
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Introduction
Key Features – ISRAEL
• GDP (Bln $US PPPs): 218
• GDP per capita ($US PPPs):
28,510
• Total population: 7.8 million
• Total fertility rates: 3.0
• Youth population aged less
than 15: 28%
• Elderly population aged 65
and over: 10%
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Key Features -SWITZERLAND
• GDP (Bln $US PPPs): 361.9
• GDP per capita ($US PPPs):
46,480
• Total population: 7.8 million
• Total fertility rates: 1.5
• Youth population aged less
than 15: 15%
• Elderly population aged 65
and over: 17.5%
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Selected Health Outcomes
ISRAEL
• Life expectancy at birth:
79.7 men, 83.6 women
• Life expectancy at 65: 18.9
men, 21.1 women
• Infant mortality (per 1,000):
3.7
• Low birth weight (per
1,000): 8.1
• Daily smokers among
adults: 23%
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SWITZERLAND
• Life expectancy at birth: 80
men, 84.9 women
• Life expectancy at 65: 19
men, 22.5 women
• Infant mortality (per 1,000):
3.8
• Low birth weight (per
1,000): 6.6
• Daily smokers among
adults: 20%
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Other Israeli and Swiss Health
Systems Similarities
• Both have a Health Insurance Law mandating
universal health coverage for all; with a basic
benefits package
• Both have access to the latest technology
• Both have relatively short waiting times for
appointments and procedures
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Health Expenditure (HE)
Indicators
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Health Expenditures as a Share
of GDP 1995-2010
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Health Expenditure (HE)
Indicators
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Health Expenditure (HE)
Indicators
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Both Israel
and
Switzerland
have high
rates of outof-pocket
spending on
dental care
and longterm care
The Israeli Health Care
System (HCS)
OECD REVIEWS OF HEALTH
CARE QUALITY: ISRAEL
Published: 14 October 2012
• "Israel has established one of the most enviable health care
systems among OECD countries in the 15 years since it
legislated mandatory health insurance. While most OECD
countries have been grappling with rapidly rising health
costs, Israel has contained growth in health care costs to
less than half the average for OECD countries over the
past decade".
• "While low levels of health spending are likely to reflect
successive years of tight control over spending, Israel has
also made the most of tight budgetary circumstances to
build a health care system with high-quality primary
health care. “
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Values Underlying
the Israeli HCS
• Strong consensus that government has an
important role to play
– primarily through financing and regulation
• The system should be fair, accessible and
working in the public interest
• A greater reliance on market mechanisms over
time
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The National Health
Insurance Law
• National Health Insurance (NHI) Law
(1995) mandates universal health insurance
for all residents
• Uniform basic benefits package
• Principles of "managed competition“
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The Israeli Managed
Competition Model
• It includes cost containment measures and
close regulation of the health plans by the
government
– In recent years, it is monitoring and publishing
quality indicators to facilitate choice and transfers.
• It allows supplemental insurance to be
marketed by the health plans
• There is no price competition (to prevent
"cream-skimming“)
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Last July in Switzerland - 75%
voted against managed care
reform
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The NHI Law (2)
• Four competing nonprofit health plans (HPs)
provide services at their own facilities or
through contracted providers
• Guaranteed freedom of choice of HP
• Allocation of monies to HPs based on
capitation
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Health Plan Market Shares
Total Population
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Age 65 and Older
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The Swiss can choose between
plans from nearly 80 different
insurance companies; the top 10
insurer conglomerates
account for 80% of enrolment
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The NHI Benefits Package
• The NHI benefits package includes hospitalization,
physician services, pharmaceuticals and many other
types of HC services
• It is considered a broad benefits package by
international standards
• HPs are required to provide these services under
conditions of reasonable accessibility and availability
– But the law does not define reasonability
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The NHI Benefits Package (2)
• Only small co-payments are required (~ 30
NIS for specialist visit; 10%-15% for
pharmaceuticals)
• Quarterly ceiling for family co-payments
(ranging from 120-300 NIS, exemptions and
discounts for chronically ill and elderly)
• Long-term care and dental care for adults are
not included in the benefits package
• Mental health was included only this year
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In Switzerland, health funds are required to
offer a minimum annual deductible of
CHF300, though enrollees may opt for a
higher deductible and a lower premium.
Enrollees pay 10% coinsurance for all
services
Since July 2010 LTC is included in the Swiss
basic insurance with 20% co-payment
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The Israeli Health Care System
Financing and Expenditures
The Public System Financing (1)
• The National Health Insurance (NHI) is financed
primarily by a health tax and general tax revenues
• Each year there is an automatic adjustment for
changes in healthcare prices
• The law mandates annual adjustments to reflect
demographic growth, aging and technological
advances
• However, the global level of funding for the NHI
is determined only after negotiations between the
Ministries of Health and Finance
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The Ministry of Finance (MOF) has
multiple, powerful points of
influence over Israeli health care
(the NHI budget is one major point);
In Israel the MOF has generally been
more influential than the MOH in
health care financing
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The Public System Financing (2)
• The NHI budget is allocated among the four
HPs mainly (85%) by capitation payments
(Risk Adjustment)
• The risk adjustment formula reflects the
number of members in each plan, their agegender mix and place of residence (no
morbidity adjusters).
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Switzerland’s risk adjustment (RA) scheme
that was similar to the Israeli scheme
(based on age, sex, and canton) was
improved as of January 2012 so that
inpatient stay of 4 days or longer in the
previous year was included. (Reform passed
in December 2007/ effective since January
2012)
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The Public System Financing (3)
• A small portion of the NHI funds is distributed
among the HPs on the basis of the number of
insured with each of five different rare, but
expensive, health conditions.
• Another portion of the funds is distributed
based on the extent to which the HPs meet
fiscal responsibility and efficiency targets set
by the MOH.
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National Expenditure on Health Care,
by Financing Sector 2000-2010 (%)
The National Health Expenditure 2010 was
61.2 billion NIS (~US$ 15.3 billion)
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Private Financing
• Consumers pay for services through voluntary health
insurance or direct out-of-pocket payments:
– Not covered in the NHI package (i.e. alternative
medicine, dental care etc.)
– Partially covered (i.e IVF treatments, Para-medicine
etc.)
• Patients also pay for services in the private system
(i.e. private hospital)
• Patients pay privately if they want increased choice of
providers, faster access to care or more advanced
facilities
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The Voluntary Health Insurance
(VHI) Market
• Two types:
– Supplementary VHI offered by the HPs to all of
their members;
– Commercial VHI, offered by commercial
insurance companies to individuals or groups.
• Since 1995 the number of VHI owners grew
rapidly
• In 2010 VHI accounted for 13% of national
HE
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The Voluntary Health Insurance
Supplementary insurance
• Most of the adults (81%) have at least one
supplementary insurance plan
• All HPs offer two layers of supplemental
insurance packages
• The premiums are relatively low
– determined solely by age
– no medical underwriting or medical exclusions
• No HP member can be denied coverage
• This product perceived by the population as part
of the public system
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The Voluntary Health Insurance
Commercial insurance
• 40% of adults have commercial VHI (Almost all also
have a supplementary insurance plan)
• Commercial VHI is provided by for-profit insurance
companies
• It can cover any medical service
– excluding co-payments in the public system
• Individuals must apply for coverage (medical
underwriting and exclusions are allowed)
• Premiums adjusted based on risk and relatively high
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There are many possible reasons
why so many people have VHI;
Main reason is the desire to have
wide coverage as much as
possible and the possibility to
choose the provider.
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Many purchase
supplementary insurance for
enhanced benefits or broader
coverage ; However, the size
of the market has been
reduced since 1995
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Israel’s Health
Insurance Market
National health insurance:
Uniform benefits package
provided by four nonprofit health
plans
The Structure of
Israel’s Health Insurance Market
Supplemental
Insurance
Supplemental insurance
(SI): Uniform extended benefits
Including LTCI
National
Health
Policy
package marketed by the health
plans
Commercial insurance:
Benefits package tailored to
individual needs; marketed by
for-profit insurance companies
Commercial
Insurance
National
Insurance
(uniform basket)
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The Israeli Health Care System
Organizational Structure and
Care Delivery
The Israeli Health Plans
• All HPs are well established (at least since the 1930s)
• All are nationwide in scope
• All have sophisticated information technology (IT)
systems
– With all primary care physicians working with electronic
health records
• They vary in their historical origins and ideological
orientations
– While Clalit (the largest) has a more socialist orientation
Maccabi (the second largest) has a liberal, free-market
orientation
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The Health Plans’
Organizational Objectives
The HPs manage care with regard to three key
organizational objectives:
1. Cost containment
2. Quality improvement
3. Equity promotion
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The Health Plans
Structure of Supply
• Over the past years HPs have proactively encouraged
health professionals to work in teams
– Clalit established clinics in which salaried health
professionals and others (i.e clerical staff) work together
– Macabbi encouraged independent doctors to work together
and with other professionals
• The average primary care clinic in Israel is staffed by
the equivalent of 3.4 general practitioners, 2.6 nurses,
1.5 practice assistants and most have a practice
manager
• The HPs set global budgets for regional managers and
they interface with the clinics' managers
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The Health Plans
Structure of Supply (2)
• Promoting primary care large clinics provides the
HPs a platform to
– Implementing system for monitoring utilization and
expenditures
– Providing doctors with additional resources
– Especially, more resources to support the chronically
ill patients
– Easy and efficient way to provide the individual
physician with the information, skills needed and IT
infrastructure to contain costs and promote quality of
care
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Cost Containment
of the Health Plans
• HP efforts to control costs include:
– Review of hospital care utilization
– The development of community-based alternatives
to hospital care
– Discounted bulk purchasing from hospitals and
pharmaceutical manufactures
– Prior authorization requirements in the case of
very high cost medications, treatments and
diagnostic tests
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Quality Improvement
The National Quality Monitoring
Project
• In 2000 all four plans started to work together on
a common framework for defining and measuring
various quality indicators
• The projects were financed by the government but
implemented by an academic team
• The implementing team with HP staff are
continuously improving and expanding the quality
indicators
• The quality performance results are publicized
every year
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In addition to its regulatory,
planning and policy-making
roles, the MOH has a key role
in two markets: the hospital
market and the workforce
market.
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Selected Medical Resources and
Output Indicators
ISRAEL
SWITZERLAND
• Practicing physicians (per
1,000 population): 3.5
• Practicing nurses (per 1,000
population): 4.8
• Rate of hospital beds (per
1,000 population): 3.3
• Average length of stay (acute
care): 4.0
• Acute care occupancy rate:
98.8
• CT scanners (per million
population; 2009): 9.4
• Practicing physicians (per
1,000 population): 3.8
• Practicing nurses (per 1,000
population): 16.0
• Rate of hospital beds (per
1,000 population): 5.0
• Average length of stay (acute
care): 7.5
• Acute care occupancy rate:
87.5
• CT scanners (per million
population; 2009): 32.8
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Hospitals
Hadassah Medical Organization, Ein Kerem Jerusalem
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In Israel, there are 376
Hospitalization Institutions
• 46 acute care hospitals (~42,600 inpatient
beds)
• 13 inpatient mental health hospitals
• 315 inpatient chronic care facilities (including
The MOH owns and operates
nursing homes)
about half of the Israel's
• 2 rehabilitation institutes acute care inpatient beds.
Clalit health plan owns and
operates another third of the
beds.
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Hospital Financing
• Hospital revenue derives primarily from the sale
of services to the HPs (80%)
• The HPs use a variety of reimbursement including
– Per diem charges and lengths-of-stay
– Per case payments (DRG)
• The government sets a cap on hospitals' annual
revenue from each HP
• Each HP negotiates separately with each hospital
for discounting arrangements for its insured
individuals.
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The Discounting Rate is
Increasing Over Time
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Hospital indicators and the
restrictive financial
mechanisms raise the
question whether the system
is efficient or whether the
quality of hospital care is
compromised
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In Switzerland, the
involvement of the cantons
and hospital indicators raise
the question whether the
healthcare system is inefficient
or providing a good and
adequate hospital care
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Workforce
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Workforce
Immigration
• Until recently, Israel relied heavily on
immigration as a source of new physicians
– The population of doctors close to doubled during
the immigration wave from Former Soviet Union
– To date, only 40% of all licensed physicians up to
age 65 have studied in Israeli medical schools
– With a decline in immigration, Israel is now
making efforts to increase domestic medical
graduates
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Workforce
Physicians
• There are 3.5 physicians per 1,000 (from
which 1.76 are specialists)
• Although this rate is above the OECD rate, the
MOH projection is that there will be a shortage
in physicians in 2020
• This shortage will be greater among primary
care physicians, since young Israeli doctors are
choosing to specialize and work in hospitals
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Workforce
Practicing Nurses
• The rate of practicing nurses in Israel is very low
– Only 4.8 per 1,000 population
– Higher only than Korea (4.6) and Mexico (2.5)
• Government has invested much effort to encourage
the training of new nurses
– Opening of the nursing school in Nazareth
– In 2010 the qualified nurses reached a record of more
than 2,000 new nurses having joined the market
• Other efforts were made to strengthen primary care
in Israel by encouraging the professionalization of
the nursing workforce
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Swiss work force: the proportion of
primary care doctors in the country is
small compared to other OECD
countries. migrant health workers
constitute an important proportion of
the health workforce. Need to
encourage medical and nursing
schools to increase the number of
health care professionals.
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The Pharmaceutical Market
• All new drugs undergo an evaluation process
before being included in the NHI package
• Most community-based prescribed medication
use is provided under the NHI and financed
primarily by the HPs and secondarily through
co-payments
• OTC medications, prescriptions by private
physicians or medications not included in the
NHI are paid out-of-pocket or by VHI
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The Pharmaceutical Market (2)
• Pharmaceutical expenditures accounted for
20% of total national health expenditure
• Israel has a large, successful and growing
pharmaceutical industry
• The most notable company is Teva, the world's
leading generics company
• Generic drugs play a major role in the Israeli
market
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Generic drugs make up
only about 10% of the drugs
sold on the Swiss market
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The Israeli Health Care System
Inequality
Complex Picture of Health
Inequalities
• The main dimensions of inequalities – income
level, ethnicity and geography – are
significantly correlated
• This make determining underlying causes of
the inequalities very difficult
• Israel's periphery (both south and north) has
higher rates of poverty and unemployment and
have a higher concentration of Arab Israelis
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Complex Picture of Health
Inequalities (2)
• Arabs constitute approximately 20% of the
population of the state of Israel
• They are entitled to all the benefits of
citizenship in the country (including the NHI
coverage)
• Half of the population living in the north and
20% of those in the south are Arabs
• Almost all Arabs (92%) live in low socioeconomics level communities
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Infant mortality rates
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Life Expectancy at Birth
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While differences between Jews
and Arabs are likely to account for
a significant share of inequality,
disparities also exist within the
Jewish population (according to
socio-economics status and place
of residence)
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Inequalities:
the Health Plans
• Arabs and Jews report similar levels of
satisfaction with their health plan overall
• Arabs tend to be more satisfied with the HP
nurses and specialist physicians
• In recent years both Clalit and Macabbi
developed a national-wide annual plan to enhance
equity
• Since 2010 the HPs publish annually their
concrete steps to enhance equity and the results
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Inequalities:
the MOH
• In 2010 the MOH has chosen reducing inequalities as
one of its major goals
• The MOH addresses geographic factors:
– Supplementary budget to the periphery hospitals that also
received new MRI scanners
– Financial incentives for physicians to work in the periphery
– Financial incentives for health plans (via the capitation
formula and compensation on specific programs)
– New medical school and nursing training in the North
– Directive to promote cultural responsiveness
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Other MOH Actions
in the last two years
– Expansion of NHI to include mental health
– Expansion of NHI to include dental care for
children
– Reductions in co-payments
– The upcoming LTC reform, which will
include LTC in the basic NHI benefits
package
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Its seems that few Swiss
have access and
availability concerns or
problems paying bills
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Discussion / Policy Issues
Key Points - Israel
• Strong high-quality primary health care with a unique
managed care model result in good health outcomes
• HPs put emphasis on data (IT improvement
monitoring and publishing quality indicators) to make
the primary care even better
• Tight budgetary circumstances with strong powerful
MOF, make cost containment a primary goal
• Limited choice make strong incentives for VHI
• Shortage of nurses with 99% acute care occupancy
rate put a heavy burden on the hospitalized patients'
families
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Key Points - Switzerland
• Switzerland is known throughout Europe for its highquality medical and paramedic services, and
healthcare is always high on the political agenda
• Offering consumers a large choice is an important
value in the Swiss health care system
– This makes managed care almost impossible to
address
• Switzerland is a wealthy country. This narrows the
importance of cost-containment as a primary goal.
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Key Points - Switzerland
• The system is highly decentralized and each of
the cantons play several roles in the system
– this makes it hard to implement policies and
strategies developed at the national level
– but decreases inequalities by periphery
• Switzerland has a large nursing workforce.
This helps to reduce the burden on informal
caregivers.
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Thank You!